News / Asia

    India Struggles to Bridge Economic Gap

    A homeless Indian woman begs on a bridge in Mumbai (file photo)
    A homeless Indian woman begs on a bridge in Mumbai (file photo)
    Anjana Pasricha

    Two decades ago, India opened up its tightly regulated economy, unleashing a wave of reforms that transformed the country and put it in the league of the world's fastest growing economies. But many consider the job only partially complete and say the South Asian country needs to bridge the gap between a prosperous middle class and the millions of people who still grapple with poverty.

    Dramatic shift

    Rajeev Nanda, a software professional, was among a wave of young people who migrated to the United States in the 1980s, because of a lack of job opportunities at home. In 2001, a decade after India opened its socialist-style economy, he returned to establish an office in Bangalore for the U.S.-based company that employed him.

    Nanda found a country dramatically different from the one he had left 12 years before.

    “When we went, it was a one-way ticket [to the U.S.," explained Nanda. "Then the economy opened up. The opportunities created a different mindset. Suddenly there was a lot of hope and lot of excitement in the air.”

    Financial woes

    The liberalization drive launched in 1991 came at a time when India was confronting a crisis. It was on the verge of defaulting on its international debt.

    Manmohan Singh (file photo)
    Manmohan Singh (file photo)

    Prime Minister Manmohan Singh - then the country’s finance minister - lifted restrictions on foreign investors, relaxed stifling controls on domestic industry and slashed taxes.

    The results were soon evident. India’s economy became the world’s second fastest-growing economy, after China. Led by a thriving information-technology sector, the services sector boomed. Manufacturing industries expanded. Exports flourished. A huge middle class emerged.

    Economic boom

    The head of the Federation of Indian Chambers of Commerce and Industry, Rajiv Kumar, says the unshackling of the private sector created the economic boom.

    “The most important thing in my view is to have freed the Indian entrepreneurial spirit, which is its traditional strength. It had been chained and caged prior to 1991 in the ideology of central planning and socialism etc,” Kumar said.

    But, 20 years later, analysts say India’s economic revolution is only partially complete. And, some people worry that it is running out of steam.

    For years, investors have waited for a second wave of reforms to open up sectors which are still tightly regulated, such as retail and insurance. Businesses grapple with lack of infrastructure, as everything from power generation to the transportation network falls short. Several Indian companies are investing overseas, rather than at home where they are deterred by problems such as acquiring land for factories.

    Unequal growth

    But economists say even more pressing is the problem of unequal growth. While one half of the country prospers, the other half continues to grapple with poverty. In the cities, swank, gated residential complexes and gleaming shopping malls contrast with sprawling urban slums.

    Poverty is rampant in many backward, rural regions. A little more than 40 percent of the people - about 450 million - live on less than $2 a day.

    P. Chidambaram (file photo)
    P. Chidambaram (file photo)

    Top Indian officials are confident the problem can be addressed by even faster growth. Among them is Home Minister P. Chidambaram, who was formerly finance minister.

    “Our biggest failure is that the pace of reduction of poverty has not been fast enough, that the growth of employment has not been fast enough," Chidambaram said. "The pace of reduction of poverty must pick up and that can only happen if growth averages over eight percent and is sustained at nine percent for several years.”

    But there are worries that brisk economic growth may not be enough to address problems such as lack of access to schooling and health care for millions of Indians. Rates of malnourishment and infant mortality are among the worst in the world. Millions of children are still unschooled.

    Effective governance

    A top Indian economist, Swaminathan Aiyar, blames lack of effective governance for such problems.

    “It is not enough to say there is some economic growth. I mean what is the condition of your schools? What is the condition of your public health? What is the condition of government services in general? That is the biggest problem that is crying out,” noted Aiyar.

    Analysts also say that, in the past year, economic issues have been put on the back burner as the government focuses its energies on fighting allegations of huge official corruption. They say this has led to a policy paralysis in the government.

    New focus

    Minister Chidambaram says the country needs to put the focus back on the economy to realize its full potential.

    “The center stage must once again be restored to growth, to change, to reforms, better governance. So the blips you see today in declining investment or more foreign outward investment, all these can be resolved…..and then outpace even China, that’s not impossible, people are beginning to talk about outpacing China,”  Chidambaram said.

    Rajeev Nanda says that, two decades after liberalization, most professionals would rather stay in India than migrate to Western countries.

    “In the last few years, I have seen even a reverse, where people do not want to go. They are simply having a better life, better opportunities right here,” Nanda said.

    Economists say the challenge in the coming years will be to bridge the gap between the middle class and the poor, so that those living now in urban slums and the countryside can echo the same sentiment.

    You May Like

    Video Pop Icon Prince Quietly Helped Afghan Orphans for Years

    He sent thousands of dollars to help an aid group rebuild a training center for orphan boy and girl scouts in Kabul, but kept his involvement secret

    Mali, a Way Station for Syrians Headed to Europe

    Another door may be closing for Syrians fleeing the conflict in their country, this time in Africa

    Britain’s Muslims See London Mayor Race as Victory

    Mere running of 45-year-old former government minister and son of Pakistani immigrants Sadiq Khan seen by many as turning point

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Donations Rescue Afghan Parents, Children From Forced Labori
    X
    May 05, 2016 6:44 PM
    A Facebook campaign organized by a VOA radio host raised 150,000 Afghan rupees to rescue a family from forced labor at a brick kiln in Nangarhar province – the result of the father’s unpaid debt. Video by a VOA reporter in Jalalabad went viral this week and triggered the Facebook campaign.
    Video

    Video Donations Rescue Afghan Parents, Children From Forced Labor

    A Facebook campaign organized by a VOA radio host raised 150,000 Afghan rupees to rescue a family from forced labor at a brick kiln in Nangarhar province – the result of the father’s unpaid debt. Video by a VOA reporter in Jalalabad went viral this week and triggered the Facebook campaign.
    Video

    Video Kurdish Troops Recount Firefight Which Killed US Navy SEAL

    A U.S. Navy SEAL killed Tuesday, when Islamic State fighters punched through Kurdish lines in northern Iraq, was part of a quick reaction force sent to extract other U.S. troops trapped by the surprise offensive. VOA's Kawa Omar spoke with Kurdish troops in the town of Telskuf -- the scene of what U.S. officials called a "dynamic firefight."
    Video

    Video British Lawmakers Warn EU Exit Talks Could Last A Decade

    Leaving the European Union would mean difficult negotiations that could take years to complete, according to a bipartisan group of British lawmakers. While the group did not recommend a vote either way, the lawmakers noted trade deals between the EU and non-EU states take between four and nine years on average. Henry Ridgwell reports on the mounting debate over whether Britain should stay or exit the EU as the June vote approaches.
    Video

    Video NASA Astronauts Train for Commercial Space Flights

    Since the last Shuttle flight in 2011, the United States has been relying on Russian rockets to launch fresh crews to the International Space Station. But that may change in the next few years. NASA and several private space companies are developing advanced capsules capable of taking humans into low orbit and beyond. As VOA's George Putic reports, astronauts are already training for commercial spacecraft in flight simulators.
    Video

    Video US Worried Political Chaos in Iraq Will Hurt IS Fight

    The White House is expressing concern about rising political chaos in Iraq and the impact it could have on the fight against the Islamic State. The U.S. says Iraq needs a stable, central government to help push back the group. But some say Baghdad may not have a unified government any time soon. VOA's White House correspondent Mary Alice Salinas reports.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.

    Special Report

    Adrift The Invisible African Diaspora